Israeli Defense Minister Moshe Dayan said here last night that his country was prepared to trade territory for peace with its Arab neighbors. At the forthcoming Geneva conference Israel must demonstrate “political wisdom” and be ready to compromise and “to insist only on what is really essential for us, and only that,” he told 3000 American Jewish leaders attending the banquet of the 1974 annual national conference of the United Jewish Appeal at the New York Hilton Hotel. “On that, we have to insist even if we will have to fight for it.” Israel, Dayan said, is “ready to pull back” from “a part of Sinai and other places” in return for a settlement. “We want to give them territories and in return we ask for peace, we ask for an agreement,” he said.

But the Defense Minister warned that the situation remains tense on the cease-fire lines, that the Arabs could resume warfare at any time and that Israel must maintain a full alert for as long as necessary even while pursuing a peace settlement in Geneva. He drew prolonged applause when he said that Israel was stronger now than at any time in its history. But he stressed that Israel must maintain its military, political and economic strength against the possibility of a new round of fighting. “We have to-get new arms…and we hope we shall get it here, in America,” he said. Dayan declared that one of the most important aspects of the Geneva conference is that Israel is going there to negotiate not only peace “but the permanent, final boundaries for Israel.” He said that Israel had nothing to ask from the Arabs as far as territories are concerned.

The Israel Defense Minister-observed that at the present time, the Jewish people as a whole are undergoing one of the most “difficult times in our history” and the question, what will happen to the Jewish people “is very much on our minds,” Dayan said. He conceded that there will be pressure on Israel but said “We can take it.” He stressed that the Jewish people are united now “and this unity makes us strong.”

Dayan arrived Friday in the U.S. on a visit officially on behalf of the United Jewish Appeal. He was in Washington today for talks with Secretary of Defense James Schlesinger to reportedly request more tanks, planes and electronic equipment to make up for losses suffered in the Yom Kippur War. On Friday, Dayan met twice with Secretary of State Henry A. Kissinger, met for 50 minutes with Vice-President Gerald Ford and also conferred with Deputy Defense Secretary William Clements, Dayan’s meeting with Ford was the first the latter had in his office adjoining the White House since he was sworn into office Dec. 6. A spokesman for the Vice-President described the meeting as “cordial and friendly.” He said Dayan expressed appreciation for America’s replacement of military equipment lost by Israel in the Yom Kippur War and that the Vice-President reaffirmed the support for Israel by President Nixon and the American people. (See P. 2 for Dayan interview on CBS-TV.)